Personal Finance: Saving vs Investing

We, Indians, generally trust our banks the most and put our saved cash with them for security. (Is it totally secure? That's a topic to discuss some other time :P)

But, banks giving 4-5% rate of interest and the inflation hovering around average  5-6%, do we consider other options for the same purpose or rather not only saving but to earn more?

Let me share some of the instruments I recently learned about which, if used wisely, can help us not just in saving but getting good returns, too! You may consider them based on your requirements and risk appetite.

NSC(National saving certificate)/ PPF(Public Provident Fund)

These are considered one of the safest mode of investment as they are held with Post Office and are backed by the Government. However, the rate of return keeps fluctuating as it is decided by the Central government from time to time. The current rates are 7.10% and 6.8% for PPF and NSC respectively.

Please note that the lock-in for PPF is 15 years and NSC comes with 5/8 years lock-in period.

Gold:

Then comes one of the most favorite investment instruments of our country, GOLD!! :P :P
You can consider that based on the current situation affecting the Gold price and your requirements!

Online FD with reputed companies

I'm sure some us must be using ETMoney app to track our expenses better (which can also be used  for investing). So, they brought last year this really good option to the Bank FDs last year where based on the amount you can get around 7% interest rate. This amount is kept with Bajaj Finserv, one of the famous credit firms in India. 

You can check out them here: https://etmoney.onelink.me/unJQ/28f49f35

Liquid Funds:

Next comes to mind is, the Liquid funds which, as the name suggests, are for liquidity purpose. They generally tend to give better returns than our savings account and you can redeem the money with certain limit, as fast as, within half an hour!

Debt Funds: 

If we move slightly towards returns  but want security, then there comes debt funds which have money in good rated bonds and certificates which are released/owned by the Government of India. They also beat the FDs in terms of returns.

Equity/Equity Oriented Funds:

Then comes the funds which hold equities, which of course, go more towards the risk side, but generate good returns in the long term. There numerous sub-categories in this type of funds and one should do research and put money based on his/her risk appetite. Here, we have something called as SIP(Systematic Investment Plan), which helps us save and invest little amount every month to cultivate good habit of not spending everything we earn!

One of the good categories in this is ELSS(Equity Linked Savings Scheme), which has a lock-in period of 3 years and can be declared for Tax Saving under the section 80C of Income Tax chapter VI A. 

You can check out them here: https://etmoney.onelink.me/unJQ/b44d3b4a 

Direct Stocks/Equities:

Now, here is the instrument which is not made for everyone! You should only use it if you fully understand it and have access to the necessary information for the same. As per Business Standard, less than 5% of Indians do direct investment in equities/stock!
(This will increase given the amount of information around personal finance is now available) 

You can use this link to open an account on Zerodha to start your stocks investment journey :)
https://zerodha.com/?c=PGJ971&s=CONSOLE

There are some good books around this topic which can help us get more clarity around personal finance habits. I've read one of them and currently reading the second and yet to checkout others.

1. The Richest Man in Babylon: https://amzn.to/3K5AAvK
2. The Intelligent Investor : https://amzn.to/3IZGHjX
3. Rich Dad Poor Dad: https://amzn.to/3EWLF07
4. The Psychology of Money: https://amzn.to/2XRi3jo